India’s leading general line canmaker Hindustan Tin Works is riding a wave of domestic growth with sales chief Saket Bhatia expanding into crown caps. Mark McCord talk to him about his plans
Successfully managing one canmaking business is usually enough of a challenge for any executive, especially given the uncertainty that has hit the industry in the past few years.
For scion of Hindustan Tin Works (HTW) Saket Bhatia, however, the opportunity to plunge into a second venture was one he couldn’t miss. Bhatia, whose father Sanjay helped build HTW into one of India’s leading canmakers, has begun making metal caps for glass beer and soft drinks bottles through a private venture called Innopac CrownPackaging, an abbreviation for “innovative packaging”.
The time is ripe, he believes, to capitalise on changing trends in the Indian drinks business. Rising wealth on the subcontinent has created a large middle class that’s more than the population of the US and it wants beverages like never before. It is also clamouring for more sustainable packaging.
“We strongly believe that due to all the environmental concerns around plastic packaging, there should be a shift towards going back to glass, which would propel the It was around 2019 that Saket set up a company to manufacture crown caps for India’s growing beverage industry. He had come by a full set of crown manufacturing plant as part of a quick bank sale held when a local manufacturer failed. Recognising the quality of the kit built by Italian packaging equipment specialist Sacmi, Bhatia believed he was making a sound investment and bought the lot along with Crabtree printing and coating lines.
At the time, the prospects for metal closures were good. The ranks of India’s middle classes were swelling consumer spending in line with the upward forecast growth of the glass bottling side,” Bhatia says. And that also means metal caps. Despite Bhatia’s confidence, his timing couldn’t have come at a more challenging period.
Geopolitical events have made it tough to source raw materials at the price point and volume many canmakers would like; the impact of pandemic mitigation measures are still affecting canmakers’ operations and consumer patterns; and, inflationary pressures are being felt across the world to such an extent that 2023 is forecast to mark the start of recession for some major economies.
Family business
Perhaps it’s because canmaking is in Saket Bhatia’s blood that he sees opportunity where others might see risk. Bhatia spent many years in the industry at HTW, the general line canmaker his family has run for decades.
After working in operations for a few years, Saket took the role of sales head in 2002.
It was around 2019 that Saket set up a company to manufacture crown caps for India’s growing beverage industry. He had come by a full set of crown manufacturing plant as part of a quick bank sale held when a local manufacturer failed. Recognising the quality of the kit built by Italian packaging equipment specialist Sacmi, Bhatia believed he was making a sound investment and bought the lot along with Crabtree printing and coating lines.
At the time, the prospects for metal closures were good. The ranks of India’s middle classes were swelling consumer spending in line with the upward forecast for the country’s economy. Bhatia estimated that just one of the lines could produce 4,000 caps a minute, or between 1.25 and 1.5 billion a year.
CrownPackaging business
He signed a multi-year lease on a building close to HTW’s main plant in Haryana where he planned to install the machinery, figuring that the proximity would streamline management of the two companies. With Sacmi providing a local service team, Bhatia felt the business was good to go. Then in 2020 the coronavirus pandemic hit and the government initiated a nationwide lockdown that paralysed business in what is now the world’s most populous country.
“The entire project was in turmoil for two years because of Covid,” Bhatia tells The Canmaker from his office in New Delhi. “The major way beer is consumed in India is at social events. All the weddings and parties were cancelled and consumption went substantially down.”
There was also “a huge decline” in demand for caps for soft drinks, Bhatia says. As a man of experience, he held his nerve and waited. When pandemic restrictions eased, Bhatia took the plunge, reactivated one of the lines and started production in December 2020.
Today the market couldn’t be more different.Bhatia said Innopac’s customers are bullish
on the back of beverage sales that are now surpassing pre-Covid levels, while sales of beer are growing in double-digit percentages.
There is a healthy stable of international brands in the country including A-B InBev, Heineken and Carlsberg, as well as local players such as Kingfisher, in which Heineken is a major shareholder, Haywards and recent entrant, Bira 91.
“We are one of the country’s leading suppliers of crown caps and we supply to all the major breweries in India,” Bhatia says of Innopac’s status.
The first line is now operating at 70% capacity and Bhatia plans to install the second line this year. That will take production up to at least 2.5 billion caps per year. Sales last year doubled on 2021 totals and Bhatia estimates growth of at least 50-60% for the year ahead.
“After that, once we have a reasonable market share, we are estimating anywhere between 8% to 10% growth year-on-year,” he says. Innopac is also hoping to pick up additional business from soft drink companies such as the local Coca-Cola bottlers, on the back of environmental concerns encouraging a shift away from plastic packaging, as well as ketchups, juices and flavoured milks. Bhatia says Indian consumers, in line with those of other nations, are increasingly interested in the sustainability of packaging and value for money.
He sees growth opportunities in the popularity of larger glass bottles of beer, particularly 650ml and 700ml, which are popular among India’s lower-income groups. While 500ml beverage cans are available, the larger bottle size is particularly popular for beers that carry a higher alcohol content. These are more likely to be bought by lower-middle class drinkers, who find only one bottle affordable; and when they do, they prefer to make that a large size, Bhatia says.
Bull market
Unlike the volatility that is fracturing the Western world, the Indian economy is expanding. The World Bank has forecast that India’s will be the fastest growing among the seven largest emerging-market economies. That’s playing into the hands of Innopac and HTW. Government spending plans and well-off consumers are changing purchasing patterns and buying the types of products on which HTW is focusing. As a result, the company is restructuring: investing and expanding production sites, localising supply chains, and targeting new markets for metal packaging.
Since it left the aluminium beverage can business in 2015 following the end of its joint venture with canmaker Rexam, food cans account for almost 90% of HTW’s domestic sales, but Bhatia’s strategy is to think beyond the familiar. And at the moment he’s thinking about paint.
“For us it is essentially the way India is constantly building infrastructure,” he says. “You need more paint, you need more chemicals. We believe there’s a huge potential to grow in the direction of non-food cans. Although we make paint cans for Asian Paints and aerosol cans for many of the big brands like Reckitt and SC Johnson, we believe HTW can get more market share.”
Economic growth is widening the ranks of India’s middle class, a group that Bhatia says already totals 400 million people. The corresponding rise in private consumption is good for canmakers.
Bhatia says many hygiene-conscious consumers are upping expenditure on products used within the home, such as air fresheners and insecticides.
“Aerosol cans are quite a big focus area for our company now,” he says. “Consumption is increasing. Just about every household uses a spray can to kill a cockroach or a mosquito.”
Bhatia says HTW took a knock following its disagreement with the Indian government’s imposition of restrictions on the import of tinplate. The Ministry of Steel’s Bureau of Indian Standards (BIS) quality assurance regulations applied to domestic and imported steel products and were supposed to ensure Indian manufacturers used only high-quality materials.
In practice it forced manufacturers of tinplate cans to buy higher-priced canstock from local giants JSW and Tata Steel as imports of cheaper foreign metal were banned. Bhatia’s father Sanjay has been at the forefront of a campaign to have the measure reversed, arguing that
it puts at risk the livelihoods of thousands of small canmakers. “The BIS notification did not allow us to import tinplate freely the way we were doing,” Bhatia says. “Plus, we were also importing certain components into India, like the domes and cones for aerosol cans. Our business model was based on imported components for the aerosol segment, but because of the BIS we were out of the market for almost oneand-a-half years.”
New perspective
Although HTW now has more import clearances, Saket Bhatia says the new BIS regulation persuaded the company to change its business model. Equipment to install its own aerosol can component lines is on order “so that the supply chain is completely
localised for us,” he says.
There are also increasing opportunities at the top end of the market and HTW is looking to expand its range of premium metal packaging products. As disposable income grows, Bhatia is hoping HTW can publicise how metal can be used to package high-end goods; one such sector is domestically-made sweets.
“We are talking to local companies, to local entrepreneurs and saying it’s not just the bigger guys like the Nestlé’s and Modelez that can sell sweets in tinplate cans at a premium price point. They can, too,” he says. HTW’s focus on decorative cans has paid off with some local brands adopting them for sweets that are traditionally given as gifts or eaten during special occasions. Bhatia says the company will continue to pursue this market, which he sees as ripe for growth.
The company also scored big when it took home the 2021 Cans of the Year award for an intricately decorated, tamper-proof lug-capped tinplate container for pan masala, a mix of fragrant herbs, nuts and seeds. The can was designed, made and printed in-house. Although HTW may be looking to localise production, the export market for components made from tinplate has become so strong that Bhatia said it sells to around 20 countries.
“We have decided to set up a separate export facility to meet demand,” he says. “And we will use the freed-up space at our main plant to install our aerosol can lines and other growth areas for the domestic market.
